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Mon, May 03, 2010

Merged: Continental and United Tie The Knot

Matchup Yields Biggest Airline In The Biz... and Possible Woes For Consumers

While most of us were trying to enjoy the weekend, the powers-that-be at United and Continental were reportedly cooking up a deal that was completed Sunday afternoon to merge the two companies to create the world's 'Largest' airline. The estimated $3.7 Billion dollar stock purchase would allow UAL to buy the entire stock of Continental in an all-stock transaction that is expected to close before the end of the year and will retain United's brand name. The combined value of the two companies is estimated at well over $8 Billion.

As we understand it, the announcement is likely to be made later today (Monday) and would install Continental Boss, Jeffery A. Smisek, as the head of the new company, while United’s chairman, Glenn F. Tilton, would be nonexecutive chairman for two years. Mr. Smisek will take of the role of executive chairman, thereafter.

The new entity's HQ remains in Chicago in UAL's current digs and will result in a fleet of some 700 aircraft and over 88,000 staffers. United shareholders allegedly will hold a 55% majority of the stock in the new venture. Simultaneously; like Eastern, PanAm and Braniff airlines before them, a once powerful airline brand will cease to be part of the aviation lexicon.

Industry analysts see the move as a probable win for UAL/Continental and a possible loss for the flying consumer who has had to put up with increasing fees, higher ticket prices and a significant decline in customer service and decorum... the combined merger provides little incentive for these airlines to make any inroads in matters of interest/importance to the flying public and history suggests that the merger will not result in positive benefits for same. Analysis of the impact on UAL and Continental staffing  remains mixed.

ANN will analyze the details expected to be made public throughout the day and furnish further updates as they become available.



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